West Los Angeles Finishes 2016 With Momentum
The West Los Angeles market saw rising rental rates highlighted by increases year-over-year of at least 5.4% for Class A, Class B and the overall market. Vacancy levels dropped after 2 quarters of flat absorption to end the year at 11.7%. Absorption gains were concentrated in the Century City and Santa Monica submarkets. Yearly leasing activity dropped to 4,613,400 SF, 8% off of last year’s total. The West Los Angeles market is poised to add just over 1.5 million SF in the near future as construction and creative conversions deliver. For companies looking to expand or relocate into more modern properties, these new deliveries will be highly sought after in the highest profile market in the Greater Los Angeles region.
The average asking monthly rent for West Los Angeles finished 2016 at $4.34 Full Service Gross (FSG) per square foot (PSF), a 7.3% increase year-over-year.
Absorption gains rebounded from the minimal gains of the previous 2 quarters by totaling 198,800 SF in positive absorption. The 2016 total of 474,800 SF was the lowest total demand since 2012.
Investment sales witnessed a flurry of activity during fourth quarter with just under 2.24 million SF trading hands.
Leasing activity recorded 1,289,200 SF and totaled 4,613,400 SF for the year.
Santa Monica and Century City saw the largest drops in vacancy, recording deltas of -250 and -190 basis points respectively.
Although market activity slowed, the outlook for the West Los Angeles market is positive. It remains the premier market for high-image media, entertainment and tech companies. Rental rates are expected to increase as newer product comes to market, while Santa Monica landlords have demonstrated confidence in fundamentals by standing fast on asking rents despite the large blocks of space available.